8.3 Cross-border claims

Question 1

What is meant by applicable law?

Answer 1

The governing law of the country

Question 2

What is an applicable law clause?

Answer 2

A contract will be governed by the law chosen by the parties. Party autonomy is respected.

This is often made clear in a governing law or applicable law clause in a written agreement.

Question 3

When are overriding mandatory provisions relevant when there is an applicable law clause?

Answer 3

Overriding mandatory provisions of the law of the country in which the dispute is heard still apply (Article 9). Provisions such as safeguarding its public interests (political, social or economic organisations)

Question 4

What are the rules governing applicable law for contractual claims?

Answer 4

Parties’ choice of law usually will be respected

Absent a choice of law by the parties, the applicable law generally will be determined by the subject matter of the contract

Certain mandatory laws will continue to apply regardless of any choice of law or operation of the rules

Question 5

What are the rules governing applicable law for non-contractual (tortious) claims?

Answer 5

The applicable law will be the law of the country where the damage occurred

Where parties have agreed on the law applicable to non-contractual claims, that choice is generally effective

Question 6

Sale of Goods Contract

What is the applicable law? (absence of choice)

Answer 6

The law of the country…

Where the seller has their habitual residence

Question 7

Sale of Goods by Auction Contract

What is the applicable law? (absence of choice)

Answer 7

The law of the country…

Where the auction takes place

Question 8

Provision of Services Contract

What is the applicable law? (absence of choice)

Answer 8

The law of the country…

Where the service provider has their habitual residence

Question 9

Relating to rights in immovable property (such as land) or tenancies

What is the applicable law? (absence of choice)

Answer 9

The law of the country…

Where the property is situated

Question 10

Tenancy for private use for no more than 6 months (such as holiday lets)

What is the applicable law? (absence of choice)

Answer 10

The law of the country…

Where the landlord has their habitual residence, provided the tenant is a natural person and has their habitual residence in the same country

Question 11

Franchise

What is the applicable law? (absence of choice)

Answer 11

The law of the country…

Where the franchisee has their habitual residence

Question 12

Distribution

What is the applicable law? (absence of choice)

Answer 12

The law of the country…

Where the distributor has their habitual residence

Question 13

Financial markets

What is the applicable law? (absence of choice)

Answer 13

The law of the country…

That governs the rules of the market

Question 14

What happens with contracts that do not fall into any of the specified categories in absence of choice, or fall into more than one?

Answer 14

The applicable law is the law of the country where:

The party required to effect the “characteristic performance” of the contract has their habitual residence.

Question 15

What is the Art 4(3) override (exception 1) to the rules of applicable law?

Answer 15

Where it is clear that the contract in question is “manifestly more closely connected” with a country other than the one indicated by the rules, the law of the other country shall apply.

Question 16

What is the Art 4(4) (exception 2) to the rules of applicable law?

Answer 16

Where the applicable law cannot be determined under the above rules, the applicable law is the law of the country with which the contract “is most closely connected”: Art 4(4).

Question 17

What is meant by ‘habitual residence’ when determining rules for applicable law?

Answer 17

Determined at the time the contract is entered into.

For companies and other bodies (such as limited liability partnerships), the place of central administration, and
for individuals acting in the course of business, their principal place of business.

Question 18

What is the definition of ‘jurisdiction’?

Answer 18

Jurisdiction means both the authority or power of the court to determine a dispute between parties as well as the territory over which the legal authority of a court extends.

Question 19

What is a way in which a court can have jurisdiction for a case?

Answer 19

A separate basis on which the court will have jurisdiction is if a foreign national or company that is the defendant in the proceedings accepts or submits to the jurisdiction by their conduct.

Question 20

How is jurisdiction confirmed in the English and Welsh courts?

Answer 20

Based on service of the claim form or submission to the jurisdiction.

Question 21

What are the ways to submit to jurisdiction?

Answer 21

By appointing a solicitor/agent in England and Wales to accept service of proceedings, and/or by taking, or appearing to take, a step in the proceedings, such as serving a defence.

Question 22

What should be done to avoid submitting to jurisdiction?

Answer 22

If they wish to avoid submitting to the jurisdiction, the defendant must be careful not to contest the case on its merits – rather service should be acknowledged with a statement that “jurisdiction will be disputed” and then the defendant must make an application under CPR Pt 11 for a declaration that the English and Welsh court does not have jurisdiction.

Question 23

When is no permission required for jurisdiction?

Answer 23

If a defendant can be served within the jurisdiction and there are very limited circumstances under which the court can decline jurisdiction.

Question 24

What is an exclusive jurisdiction clause?

Answer 24

No permission is required where the parties have chosen the jurisdiction to govern their dispute – for example, in an exclusive jurisdiction clause in a contract. Parties’ choice of jurisdiction is usually respected and followed.

Question 25

What should be done when the defendant is out of the jurisdiction?

Answer 25

Claimant must apply for permission to serve the defendant out of the jurisdiction and establish that one of the ‘jurisdictional gateways’ applies.

Question 26

What are ‘jurisdiction gateways’?

Answer 26

Where a defendant cannot be served with the claim form within the jurisdiction, consideration must be given to whether there is a rule (often referred to as a “gateway”) permitting service out of the jurisdiction.

Question 27

What are the common jurisdictional gateways for contractual claims?

Answer 27

1) Contract was made within the jurisdiction

2) Contract was made by, or through, an agent trading or residing within the jurisdiction

3) Contract is governed by English law

4) Claim is in respect of a breach of contract committed in the jurisdiction

Question 28

What are the common jurisdictional gateways for tortious claims?

Answer 28

The damage was sustained, or will be sustained, within the jurisdiction

The damage which has been, or will be, sustained, results from an act committed or likely to be committed within the jurisdiction